112TH CONGRESS                                                                      REPORT                                ...
CONCURRENT RESOLUTION ON THE BUDGET—FISCAL YEAR 2013tjames on DSK6SPTVN1PROD with REPORTS                                 ...
1                                                                               112TH CONGRESS                            ...
COMMITTEE ON THE BUDGET                                                                                                   ...
CONTENTS                                                                                                                  ...
IV                                                                                                                        ...
TABLES                                                                                                                    ...
tjames on DSK6SPTVN1PROD with REPORTS                                        VerDate Mar 15 2010   08:31 Mar 24, 2012   Jk...
112TH CONGRESS                                                                   REPORT                                   ...
tjames on DSK6SPTVN1PROD with REPORTS                                        VerDate Mar 15 2010   08:31 Mar 24, 2012   Jk...
Statement of Congressional Authority                                                                                      ...
tjames on DSK6SPTVN1PROD with REPORTS                                        VerDate Mar 15 2010   08:31 Mar 24, 2012   Jk...
Introduction                                                                                                              ...
6                                                                              in late 2008 helped to stem the immediate f...
7                                                                              a budget plan—it has been three years since...
8                                                                                      1. Prioritize defense spending to k...
9                                                                                Streamlining other government agencies: D...
10                                                                                 Saving Medicare: Medicare is facing an ...
11                                                                                Controlling spending: The budget process...
12tjames on DSK6SPTVN1PROD with REPORTS                                                                                   ...
13tjames on DSK6SPTVN1PROD with REPORTS                                                                                   ...
14tjames on DSK6SPTVN1PROD with REPORTS                                                                                   ...
15tjames on DSK6SPTVN1PROD with REPORTS                                                                                   ...
16tjames on DSK6SPTVN1PROD with REPORTS                                                                                   ...
17tjames on DSK6SPTVN1PROD with REPORTS                                                                                   ...
18tjames on DSK6SPTVN1PROD with REPORTS                                                                                   ...
19tjames on DSK6SPTVN1PROD with REPORTS                                                                                   ...
20tjames on DSK6SPTVN1PROD with REPORTS                                                                                   ...
21tjames on DSK6SPTVN1PROD with REPORTS                                                                                   ...
22tjames on DSK6SPTVN1PROD with REPORTS                                                                                   ...
Economic Assumptions of the Budget                                                                                        ...
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H.rep. 112 421

  1. 1. 112TH CONGRESS REPORT " HOUSE OF REPRESENTATIVES ! 2d Session 112–421 CONCURRENT RESOLUTION ON THE BUDGET— FISCAL YEAR 2013 R E P O R T OF THE COMMITTEE ON THE BUDGET HOUSE OF REPRESENTATIVES TO ACCOMPANY H. Con. Res. 112 ESTABLISHING THE BUDGET FOR THE UNITED STATES GOVERN- MENT FOR FISCAL YEAR 2013 AND SETTING FORTH APPRO- PRIATE BUDGETARY LEVELS FOR FISCAL YEARS 2014 THROUGH 2022 together with MINORITY VIEWS MARCH 23, 2012.—Committed to the Committee of the Whole House on the State of the Union and ordered to be printedtjames on DSK6SPTVN1PROD with REPORTS seneagle VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00001 Fmt 6012 Sfmt 6012 E:HROCHR421.XXX HR421
  2. 2. CONCURRENT RESOLUTION ON THE BUDGET—FISCAL YEAR 2013tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00002 Fmt 6019 Sfmt 6019 E:HROCHR421.XXX HR421
  3. 3. 1 112TH CONGRESS REPORT " HOUSE OF REPRESENTATIVES ! 2d Session 112–421 CONCURRENT RESOLUTION ON THE BUDGET— FISCAL YEAR 2013 R E P O R T OF THE COMMITTEE ON THE BUDGET HOUSE OF REPRESENTATIVES TO ACCOMPANY H. Con. Res. 112 ESTABLISHING THE BUDGET FOR THE UNITED STATES GOVERN- MENT FOR FISCAL YEAR 2013 AND SETTING FORTH APPRO- PRIATE BUDGETARY LEVELS FOR FISCAL YEARS 2014 THROUGH 2022 together with MINORITY VIEWS MARCH 23, 2012.—Committed to the Committee of the Whole House on the State of the Union and ordered to be printedtjames on DSK6SPTVN1PROD with REPORTS U.S. GOVERNMENT PRINTING OFFICE 73–320 WASHINGTON : 2012 seneagle VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00003 Fmt 4012 Sfmt 4012 E:HROCHR421.XXX HR421
  4. 4. COMMITTEE ON THE BUDGET PAUL RYAN, Wisconsin, Chairman SCOTT GARRETT, New Jersey CHRIS VAN HOLLEN, Maryland, MICHAEL K. SIMPSON, Idaho Ranking Minority Member JOHN CAMPBELL, California ALLYSON Y. SCHWARTZ, Pennsylvania KEN CALVERT, California MARCY KAPTUR, Ohio W. TODD AKIN, Missouri LLOYD DOGGETT, Texas TOM COLE, Oklahoma EARL BLUMENAUER, Oregon TOM PRICE, Georgia BETTY MCCOLLUM, Minnesota TOM MCCLINTOCK, California JOHN A. YARMUTH, Kentucky JASON CHAFFETZ, Utah BILL PASCRELL, JR., New Jersey MARLIN A. STUTZMAN, Indiana MICHAEL M. HONDA, California JAMES LANKFORD, Oklahoma TIM RYAN, Ohio DIANE BLACK, Tennessee DEBBIE WASSERMAN SCHULTZ, Florida REID J. RIBBLE, Wisconsin GWEN MOORE, Wisconsin BILL FLORES, Texas KATHY CASTOR, Florida MICK MULVANEY, South Carolina HEATH SHULER, North Carolina TIM HUELSKAMP, Kansas KAREN BASS, California TODD C. YOUNG, Indiana SUZANNE BONAMICI, Oregon JUSTIN AMASH, Michigan TODD ROKITA, Indiana FRANK C. GUINTA, New Hampshire ROB WOODALL, Georgia PROFESSIONAL STAFF AUSTIN SMYTHE, Staff Director THOMAS S. KAHN, Minority Staff Directortjames on DSK6SPTVN1PROD with REPORTS (II) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 E:HROCHR421.XXX HR421
  5. 5. CONTENTS Page Statement of Congressional Authority Under the Constitution and the Law .... 3 Introduction: A Blueprint for American Renewal .................................................. 5 Summary Tables—Spending and Revenues: Table 1. Fiscal Year 2013 Budget Resolution ................................................ 12 Table 2. Fiscal Year 2013 Budget Resolution Discretionary Spending ........ 15 Table 3. Fiscal Year 2013 Budget Resolution Mandatory Spending ............ 17 Table 4. Summary of Fiscal Year 2013 Budget Resolution ........................... 20 Table 5. Fiscal Year 2013 Budget Resolution vs. the President’s Budget ... 21 Economic Assumptions of the Budget Resolution ................................................. 23 Table 6. Economic Projections: Administration, CBO, and Private Fore- casters ............................................................................................................ 25 Table 7. Economic Assumptions of the Fiscal Year 2013 Budget Resolu- tion ................................................................................................................. 27 Table 8. Tax Expenditure Estimates by Budget Function, Fiscal Years 2011–2015 ...................................................................................................... 28 Function-by-Function Presentation ........................................................................ 47 050 National Defense ....................................................................................... 49 150 International Relations ............................................................................. 53 250 General Science, Space, and Technology ................................................. 57 270 Energy ........................................................................................................ 59 300 Natural Resources and Environment ...................................................... 63 350 Agriculture ................................................................................................. 67 370 Commerce and Housing Credit ................................................................ 69 400 Transportation ........................................................................................... 77 450 Community and Regional Development .................................................. 81 500 Education, Training, Employment, and Social Services ........................ 85 550 Health ......................................................................................................... 91 570 Medicare ..................................................................................................... 95 600 Income Security ......................................................................................... 99 650 Social Security ........................................................................................... 103 700 Veterans Benefits and Services ................................................................ 107 750 Administration of Justice ......................................................................... 109 800 General Government ................................................................................. 111 900 Net Interest ............................................................................................... 113 920 Allowances ................................................................................................. 115 950 Undistributed Offsetting Receipts ........................................................... 119 970 Global War on Terrorism and Related Activities ................................... 121 Revenue .................................................................................................................... 123 Views and Estimates of the Committee on Ways and Means .............................. 127 Reprioritizing Sequester Savings ........................................................................... 131 Table 9. Reconciliation Savings by Authorizing Committee ......................... 135 The Long-Term Budget Outlook ............................................................................. 137 Table 10. Fiscal Year 2013 Budget Resolution vs. the CBO Alternative Fiscal Scenario .............................................................................................. 141 Section-by-Section Description ............................................................................... 143 Title I. Spending and Revenue Levels ............................................................ 143 Title II. Reconciliation ...................................................................................... 144 Title III. Recommended Levels for Fiscal Years 2030, 2040, and 2050 ....... 145 Title IV. Reserve Funds ................................................................................... 146 Title V. Budget Enforcement ........................................................................... 147 Title VI. Policy .................................................................................................. 151 Title VII. Sense of the House Provisions ........................................................ 153tjames on DSK6SPTVN1PROD with REPORTS (III) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 E:HROCHR421.XXX HR421
  6. 6. IV Page The Congressional Budget Process ......................................................................... 155 Table 11. Allocation of Spending Authority to House Committee on Ap- propriations ................................................................................................... 158 Table 12. Resolution by Authorizing Committee (on-budget amounts) ....... 159 Enforcing Budgetary Levels .................................................................................... 163 Reconciliation ........................................................................................................... 165 Accounts Identified for Advance Appropriations ................................................... 167 Votes of the Committee ........................................................................................... 169 Other Matters To Be Discussed Under the Rules of the House .......................... 195 Minority Views ......................................................................................................... 196 The Concurrent Resolution on the Budget for Fiscal Year 2013 ......................... 201tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00006 Fmt 5904 Sfmt 5904 E:HROCHR421.XXX HR421
  7. 7. TABLES Page Table 1. Fiscal Year 2013 Budget Resolution ........................................................ 12 Table 2. Fiscal Year 2013 Budget Resolution Discretionary Spending ............... 15 Table 3. Fiscal Year 2013 Budget Resolution Mandatory Spending ................... 17 Table 4. Summary of Fiscal Year 2013 Budget Resolution .................................. 20 Table 5. Fiscal Year 2013 Budget Resolution vs. the President’s Budget .......... 21 Table 6. Economic Projections: Administration, CBO, and Private Forecasters 25 Table 7. Economic Assumptions of the Fiscal Year 2013 Budget Resolution ..... 27 Table 8. Tax Expenditure Estimates by Budget Function, Fiscal Years 2011– 2015 ....................................................................................................................... 28 Table 9. Reconciliation Savings by Authorizing Committee ................................ 135 Table 10. Fiscal Year 2013 Budget Resolution vs. the CBO Alternative Fiscal Scenario ................................................................................................................. 141 Table 11. Allocation of Spending Authority to House Committee on Appropria- tions ....................................................................................................................... 158 Table 12. Resolution by Authorizing Committee (on-budget amounts) ............... 159tjames on DSK6SPTVN1PROD with REPORTS (V) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00007 Fmt 5904 Sfmt 5904 E:HROCHR421.XXX HR421
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  9. 9. 112TH CONGRESS REPORT " HOUSE OF REPRESENTATIVES ! 2d Session 112–421 CONCURRENT RESOLUTION ON THE BUDGET— FISCAL YEAR 2013 ESTABLISHING THE BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2013 AND SETTING FORTH APPROPRIATE BUDGETARY LEVELS FOR FISCAL YEARS 2014 THROUGH 2022 MARCH 23, 2012.—Committed to the Committee of the Whole House on the State of the Union and ordered to be printed Mr. RYAN of Wisconsin, from the Committee on the Budget, submitted the following R E P O R T together with MINORITY VIEWS [To accompany H. Con. Res. 112]tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00009 Fmt 6659 Sfmt 6659 E:HROCHR421.XXX HR421
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  11. 11. Statement of Congressional Authority Under the Constitution and the Law Article I of the U.S. Constitution grants Congress the power to appropriate funds from the Treasury, pay the obligations of and raise revenue for the Federal Government, and publish statements and accounts of all financial transactions. In addition, the Congressional Budget and Impoundment Act of 1974 requires Congress to write a budget each year representing its plan to carry out these transactions in the forthcoming fiscal years. While the President is required to propose his administra- tion’s budget requests for Congress’s consideration, Congress alone is responsible for writing the laws that raise revenues, appropriate funds, and prioritize taxpayer dollars within an overall Federal budget. The budget resolution is the only legislative vehicle that views government comprehensively. It provides the framework for the consideration of other legislation. Ultimately, a budget is much more than series of numbers. It also serves as an expression of Congress’s principles, vision, and philosophy of governing. This budget, submitted to the U.S. House of Representatives for fiscal year 2013 and beyond, builds upon the budget that was writ- ten and passed by the new House majority last year. Like last year’s budget, it is offered on time, in accordance with the 1974 Budget Act, out of respect for the law and in order that the public be given a timely and transparent accounting of their government’s work. Like last year’s budget, it is committed to the timeless principles of American government enshrined in the U.S. Constitution—lib- erty, limited government, and equality under the rule of law. And like last year’s budget, it seeks to guide the Nation’s policies by those principles, freeing it from the crushing burden of debt now threatening its future. This budget is submitted, as prescribed by law, to clarify the challenges and the choices facing the American people, to provide a blueprint for the orderly execution of Congress’s constitutional duties, and to describe a path forward that renews the promise of this exceptional Nation.tjames on DSK6SPTVN1PROD with REPORTS (3) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00011 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
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  13. 13. Introduction A Nation Challenged The challenges this Nation faces are among the largest in its his- tory. For years, bad policies advanced by both political parties have contributed to an irresponsible build-up of debt in the economy, and this debt now poses a fundamental challenge to the American way of life. This build-up of debt has manifested its effects in both the pri- vate and public sectors. In 2008, excessive leverage in the financial sector overwhelmed many banks, businesses and families. Irrespon- sible decisions in Washington and on Wall Street fueled a housing- price bubble that collapsed and turned mortgage-backed securities into ‘‘toxic assets.’’ It soon became clear that these assets, which were spread throughout the financial sector, posed a systemic risk to the economy. The resulting wave of panics, bankruptcies and foreclosures brought the global financial system to the brink of col- lapse. America is still living with the painful consequences of that crisis today. While some of the Federal Government’s emergency actionstjames on DSK6SPTVN1PROD with REPORTS (5) Insert offset folio 11 here 73320.001 VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00013 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  14. 14. 6 in late 2008 helped to stem the immediate financial crisis, much of its intervention in the wake of the crisis simply aggravated the underlying problems. In most cases, policymakers sought to ad- dress the symptoms of the crisis by transferring private-sector debt to the public balance sheet. Since Election Day 2008, debt held by the public has increased by roughly $4.5 trillion—a 70 percent in- crease in a mere four years. This remedy didn’t just ignore the underlying cause of the prob- lem—it made the problem far worse. In Europe, the accumulation of public-sector debt now threatens to cause an even bigger calam- ity than the one caused by private-sector debt in 2008. The world’s new ‘‘toxic asset’’ is the sovereign debt of irresponsible European governments, infecting the balance sheets of major banks and threatening the stability of the global economy. And in the United States, government debt continues to rise at a frightening pace, raising fears that a similar crisis may happen here. The growing possibility of such a crisis is creating debilitating uncertainty about the future, hurting job creation and economic growth today. The economy has picked up in recent quarters, but overall growth and job creation remain sub-par, and unprecedented numbers of Americans have simply given up trying to find work. Real GDP grew by just 1.7 percent in 2011, and private-sector fore- casters are calling for growth of 2.3 percent in 2012—well below the 3.0 percent historical trend rate of U.S. growth and just a frac- tion of the growth pace observed in a typical recovery from reces- sion. Noted economists, including Federal Reserve Chairman Ben Bernanke, have argued that enacting a credible plan to deal with America’s long-term debt build-up would have a positive effect on growth and jobs immediately. Unfortunately, in the years following the meltdown, the Presi- dent and his party’s leaders failed to use their full control of Wash- ington to offer any plan to lift the debt and foster sustainable eco- nomic growth. Instead, the crisis was used as an excuse to enact unprecedented and counterproductive expansions of government power. A massive stimulus package failed to deliver promised re- ductions in unemployment. An unpopular health care takeover was jammed through Congress on a party-line vote. A short-sighted fi- nancial-regulatory overhaul failed to fix what was broken on Wall Street and made future bailouts more likely. And Federal policy- makers in thrall to a misguided form of environmental activism pushed through regulations and other policies that are making en- ergy more expensive in the midst of a weak economy. Through it all, the government’s fiscal position sharply deterio- rated. Total Federal debt has now surpassed the size of the entire U.S. economy. And the government’s non-partisan auditors have issued report after report warning of even larger debts to come, driven by health and retirement security programs that are being weakened by severe demographic and economic challenges. Instead of taking action, the administration punted the Nation’s fiscal problems to a bipartisan commission, whose recommenda- tions it proceeded to ignore in favor of proposals filled with gim- micks instead of real solutions. And the Democratic leaders of thetjames on DSK6SPTVN1PROD with REPORTS Senate have altogether abandoned their legal obligation to provide VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00014 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  15. 15. 7 a budget plan—it has been three years since the Senate passed a budget. A Choice of Two Futures Both parties share the blame for failing to take action over the years. But while Republicans offered a budget last year that would lift the crushing burden of debt and restore economic growth, the President and his party’s leaders are still refusing to take seriously the urgent need to advance credible solutions to the looming fiscal crisis. Instead, they are still offering little more than false attacks and failed leadership. Questioned about this disappointing reality at a recent House Budget Committee hearing, Treasury Secretary Timothy Geithner admitted, ‘‘We’re not coming before you to say we have a definitive solution to our long-term problem. What we do know is we don’t like yours.’’ 1 The President’s strategy seems to amount to this: Let somebody else propose a path forward, and then attack them for political gain. This budget offers a better path. The following report lays out the challenge—and the choice—that America faces in each key area of the budget. The common thread connecting them all is that a sharp and sudden debt crisis would threaten the entire American project: It would weaken national security, shred the safety net that vulnerable Americans rely on, break promises to seniors, im- pose massive tax increases on families, and leave all Americans with a diminished future. This looming crisis represents an enormous challenge, but it also represents a defining choice: whether to continue down the path of debt, doubt and decline, or put the Nation back on the path to pros- perity. It also represents a tremendous opportunity for this genera- tion of Americans to rise to the challenge, as previous generations have, and fulfill this Nation’s unique legacy of leaving future gen- erations with a freer, more prosperous America. A Blueprint for American Renewal This budget sets forth a model of government guided by the time- less principles of the American Idea: free enterprise and economic liberty; limited government and spending restraint; traditional family and community values; and a strong national defense. The Federal Government has strayed from these American prin- ciples. This budget offers a set of fundamental reforms to put the Nation back on the right track. The role of the Federal Government is both vital and limited. When government takes on too many tasks, it usually does not do any of them very well. Limited government also means effective government. This budget recommits the Federal Government to the security of every American citizen’s natural right to life, liberty and the pursuit of happiness, while fostering an environment for eco- nomic growth and private-sector job creation.tjames on DSK6SPTVN1PROD with REPORTS 1 Geithner, Timothy. ‘‘The President’s Fiscal Year 2013 Budget: Revenue and Economic Policy Proposals.’’ House Budget Committee hearing. February 16, 2012. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00015 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  16. 16. 8 1. Prioritize defense spending to keep America safe With American men and women in uniform currently engaged with a fierce enemy and dealing with emerging threats around the world, this budget takes several steps to ensure that national secu- rity remains government’s top priority. Providing for the common defense: This budget rejects proposals to make thoughtless, across-the-board cuts in funding for national defense. Instead, it provides $554 billion for national defense spending, an amount that is consistent with America’s military goals and strategies. This budget preserves necessary defense spending to protect vital national interests today and ensures fu- ture real growth in defense spending to modernize the armed forces for the challenges of tomorrow. Reprioritizing sequester savings to protect the Nation’s security: The defense budget is slated to be cut by $55 billion, or 10 percent, in January of 2013 through the sequester mechanism enacted as part of the Budget Control Act of 2011. This reduction would be on top of the $487 billion in cuts over ten years proposed in President Obama’s budget. This budget eliminates these additional cuts in the defense budget by replacing them with other spending reduc- tions. Spending restraint is critical, and defense spending needs to be executed with effectiveness and accountability. But government should take care to ensure that spending is prioritized according to the nation’s needs, not treated indiscriminately when it comes to making cuts. The nation has no higher priority than safeguarding the safety and liberty of its citizens from threats at home and abroad. 2. End cronyism and restore free enterprise A growing economy, increased employment and higher wages will come from traditional American ingenuity and enterprise, not from government. To achieve this end, small businesses need to be em- powered, and the size and scope of Washington need to be reduced so that the hard work and enterprise of Americans can lead a strong, sustained recovery. Ending corporate welfare: There is a growing and pernicious trend of government overreach into the private economy—a trend that stacks the deck in favor of entrenched interests and stifles growth. This budget stops Washington from picking winners and losers across the economy. It rolls back corporate subsidies in the energy sector. It ends the taxpayer bailouts of failed financial insti- tutions, including Fannie Mae and Freddie Mac. It repeals the gov- ernment takeover of health care enacted last year and begins to move toward patient-centered reform. And it reduces the bureauc- racy’s reach by applying private-sector realities to the Federal Gov- ernment’s civilian workforce. Boosting American energy resources: Too great a percentage of America’s vast natural resources remain locked behind bureau- cratic barriers and red tape. This budget lifts moratoriums on safe, responsible energy exploration in the United States, ends Wash- ington policies that drive up gas prices, and unlocks American en- ergy production to help lower costs, create jobs and reduce depend-tjames on DSK6SPTVN1PROD with REPORTS ence on foreign oil. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00016 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  17. 17. 9 Streamlining other government agencies: Domestic government agencies have grown too much and too fast over the past decade, and much of their funding has gone to harmful programs and dead- end projects. This budget starts to restore spending discipline. It builds on efforts undertaken last year to contain the government’s growth, and it targets hundreds of government programs that have outlived their usefulness. 3. Strengthen the social safety net This budget builds upon the historic progress of bipartisan wel- fare reform in the late 1990s. It strengthens Medicaid, food stamps and job-training programs by providing States with greater flexi- bility to help recipients build self-sufficient futures for themselves and their families. Repairing a broken Medicaid system: Medicaid’s flawed financing structure has created rapidly rising costs that are nearly impos- sible to check. Mandate upon mandate has been foisted upon States under the flawed premise that the best ideas for repairing this im- portant health care safety net can come only from Washington. This budget ends that misguided approach and instead converts the Federal share of Medicaid spending into a block grant, thus freeing States to tailor their Medicaid programs to the unique needs of their own populations. Prioritizing assistance for those in need: The welfare reforms of the 1990s, despite their success, were never extended beyond cash welfare to other means-tested programs. This budget completes the successful work of transforming welfare by reforming other areas of America’s safety net to ensure that welfare does not entrap able- bodied citizens into lives of complacency and dependency. Ensuring educational and job-training opportunities for a 21st century economy: The government’s well-intentioned approach to higher education and job training in America has failed those who most need these forms of assistance. Federal tuition subsidies are often captured by (and to a certain extent drive) rapidly rising tui- tion costs for those higher-education programs that should be the first rung on the ladder of opportunity. Meanwhile, dozens of job- training programs suffer from overlapping responsibilities and too often lack accountability. This budget begins to address the problem of tuition inflation and consolidates a complex maze of dozens of job-training programs into more accessible, accountable career scholarships aimed at em- powering American workers with the resources they need to pursue their dreams. 4. Fulfill the mission of health and retirement security This budget puts an end to empty promises from Washington, of- fering instead real security through real reforms. The framework established in this budget ensures no disruptions to existing health and retirement benefit programs for those beneficiaries who have organized their retirements around them, while at the same time building stronger programs that future beneficiaries can count ontjames on DSK6SPTVN1PROD with REPORTS when they retire. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00017 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  18. 18. 10 Saving Medicare: Medicare is facing an unprecedented fiscal challenge. Its failed reliance on bureaucratic price controls and gov- ernment rationing, combined with rising health care costs, is jeop- ardizing seniors’ access to critical care and threatening to bankrupt the system—and ultimately the Nation. This budget saves Medi- care by fixing flaws in its structure so it will be there for future generations. By putting these solutions in place now, this budget ensures that changes will not affect those in and near retirement in any way. When younger workers become eligible for Medicare a decade or more from today, they will be able to choose from a list of guaran- teed coverage options, including a traditional Medicare fee-for-serv- ice plan. This flexibility will allow seniors to enjoy the same kind of choices in their plans that members of Congress enjoy. Medicare will provide a payment to subsidize the cost of the plan. In addi- tion, Medicare will provide increased assistance for lower-income beneficiaries and those with greater health risks. Reform that em- powers individuals—with a strengthened safety net for the poor and the sick—will guarantee that Medicare can fulfill the promise of health security for America’s seniors. Advancing Social Security solutions: The risk to Social Security, driven by demographic changes, is nearer at hand than most ac- knowledge. This budget heads off a crisis by calling on the Presi- dent and both chambers of Congress to ensure the solvency of this critical program. 5. Enact pro-growth tax reform This budget recognizes that the Nation’s fiscal health requires a vibrant, growing private sector. It charts a prosperous path forward by reforming a tax code that is overly complex and unfair. Individual tax reform: The current code for individuals is too complicated, with high marginal rates that discourage hard work and entrepreneurship. This budget embraces the widely acknowl- edged principles of pro-growth tax reform by proposing to consoli- date tax brackets and lower tax rates, with just two rates of 10 and 25 percent, while clearing out the burdensome tangle of loopholes that distort economic activity. Corporate tax reform: American businesses are overburdened by one of the highest corporate income tax rates in the developed world. The perverse incentives created by the corporate income tax do a lot of damage to both workers and investors, yet the tax itself raises relatively little revenue. This budget improves incentives for job creators to work, invest, and innovate in the United States by lowering the corporate rate from 35 percent to a much more com- petitive 25 percent and by shifting to a territorial system that will ensure a level playing field for American businesses. 6. Change Washington’s culture of spending Across the political spectrum, experts agree that the budget proc- ess is badly broken and in need of reform. The process fails to con- trol spending, fails to provide adequate oversight, and fails to allowtjames on DSK6SPTVN1PROD with REPORTS the transparency needed for accountability to the Nation’s citizens. VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00018 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
  19. 19. 11 Controlling spending: The budget process in Washington contains numerous structural flaws that bias the Federal Government to- ward ever-higher levels of spending. This budget would lock in sav- ings with enforceable spending caps and budget process reforms, limiting what Washington spends and how tax dollars are spent. Enhancing oversight: This budget gives Congress greater tools to perform oversight over wasteful Washington spending. Increasing transparency: This budget promotes reforms that would give taxpayers more information over how Washington is spending their hard-earned dollars. 7. Lift the crushing burden of debt This budget charts a sustainable path forward, ultimately erases the budget deficit completely, and begins paying down the national debt. Americans truly face a monumental choice—a choice that can no longer be avoided. The Path to Prosperity advances the serious conversation begun last year about the future of this exceptional Nation and the funda- mental choices Americans must soon make about the kind of Na- tion they want America to be. This budget would put in place a comprehensive framework to address the Nation’s greatest challenges. It provides an opportunity to initiate the actual work of statecraft. The elected representatives of the American people—in the House of Representatives, in the Senate and in the White House—now must take up this budget and start building the future Americans deserve.tjames on DSK6SPTVN1PROD with REPORTS VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00019 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421
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  31. 31. Economic Assumptions of the Budget Resolution Introduction The U.S. economy picked up in the final quarter of 2011 but overall growth and job creation remain sub-par. Real gross domes- tic product [GDP] grew by just 1.7 percent in 2011 and private-sec- tor forecasters are calling for growth of 2.2 percent in 2012—well below the 3.0 percent historical trend rate of U.S. growth and just a fraction of the growth pace observed in a typical recovery from recession. Employment increased by 243,000 in January, an en- couraging sign, and the unemployment rate edged down to a 3-year low of 8.3 percent but there is still an enormous ‘‘jobs deficit’’ in the economy. It is sobering to point out that of the nearly 8.8 mil- lion jobs that were lost in the 2008/2009 recession and aftermath, only about one-third have been recovered. Economists now estimate that with such sub-par economic growth the unemployment rate will probably not return to its pre-recession level until very late in the decade. Three key factors are likely to contribute to below-trend U.S. eco- nomic growth in the near term: (1) likelihood of a recession in Eu- rope and fears of global financial market contagion sparked by Eu- rope’s ongoing sovereign debt crisis, (2) prolonged weakness in the U.S. housing market, including a continued decline in home values, (3) only modest job growth, which constrains wage and income growth and therefore consumer spending (which typically accounts for 70 percent of U.S. GDP). In addition, gasoline prices have risen 15 percent since the beginning of the year and will likely rise fur- ther this spring and summer, which promises to reduce consumers’ purchasing power. Noting the sub-par growth outlook and the at- tendant downside risks, the Federal Reserve believes that it will most likely keep interest rates at or near zero until the end of 2014. The Current Economic Situation The current economic data suggest that the U.S. economy is ex- panding at a moderate pace, although the recovery from the reces- sion and financial crisis still promises to be long and difficult. Real GDP grew by 3.0 percent in the fourth quarter of 2011, up from 1.8 percent in the third quarter. Roughly two-thirds of that increase, however, was due to business inventory restocking, a tem- porary boost to GDP that will not be sustained in the coming quar- ters. The economy grew by a sluggish 1.7 percent in 2011 and thetjames on DSK6SPTVN1PROD with REPORTS (23) VerDate Mar 15 2010 08:31 Mar 24, 2012 Jkt 073320 PO 00000 Frm 00031 Fmt 6601 Sfmt 6601 E:HROCHR421.XXX HR421

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